Posted: 27 January 2010
Issue: Online only
Categories: News, Update, CT

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Illegal tax

Another victory for Aberdeen in dividends saga

PricewaterhouseCoopers (PwC) has predicted multimillion tax refunds for investment funds in the EU, following a decision by authorities in Norway.

The country’s government this week pledged to repay withholding taxes to the Finnish resident real estate company Aberdeen Property Fininvest Alpha Oy, which is structured as a Luxembourg société d’investissement à capital variable, a type of open-ended investment fund.
 
The decision follows the final judgment issued last June by the European Court of Justice (ECJ) in favour of Aberdeen. It was ruled that the application of withholding tax on dividends paid to non-resident investment funds, while exempting domestic investment funds, was discriminatory and in breach of Articles 43 and 48 and Articles 56 and 58 of the EC Treaty.

This led to a number of successful cases for the taxpayer where withholding tax on dividends had been levied. PwC said this week’s settlement in Norway sets a precedent for other fund claimants to come forward under EU law with cases of unlawful treatment, and challenges of illegitimate application of withholding taxes levied on dividends should lead to refunds of millions of euros.

The company’s UK asset management tax leader, Teresa Owusu-Adjei, remarked, ‘The values to be reclaimed… are significant… Both the Aberdeen ECJ ruling and this settlement… will have a significant impact on the current withholding tax on dividends regimes applied in EU and EEA jurisdictions, ensuring a level playing field for all funds.’

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